Over the past decade, Chattanooga has benefited by more than $5 billion of new investments from Volkswagen, Amazon, Wacker Chemical, Nokian Tyres and others moving into the region and spurring related investments.

But in 2018, much of the new capital coming to town was put into existing businesses to help them grow or to buy or build major apartment complexes in Hamilton County.

Chattanooga continues to attract outside interest from business prospects.

"This is the busiest December we've had in several years," said Charles Wood, the vice president of economic development for the Chattanooga Area Chamber of Commerce. "But while project activity is really high, decision making is really slow. There's a lot of business activity and a lot of companies are eager to grow their capacity and they are looking for new locations to add to their manufacturing or other operations. But there is a lot of anxiety with the fact that we've seen 10 years of growth and they are somewhat worried about how long that will continue."

While waiting on some prospects to decide their future, many companies already here capitalized on the improved markets this year to raise more equity, sell their businesses or invest in what they already have here.

Workers produce vehicles at Volkswagen's lone U.S. plant in Chattanooga, Tenn., on Thursday, Aug. 31, 2017. The plant has begun production of the midsized Atlas SUV alongside the Passat sedan. (AP Photo/Erik Schelzig)

In the near term, Tennessee's automotive industry, which has grown to make the Volunteer State one of the top 5 auto assembly states in the country, may see a slight slowdown in production in 2019 after record car and truck sales in recent years.

"Light vehicle production may be down a bit in 2019, and higher interest rates may dampen some growth," said Matt Murray, associate director of the Boyd Center for Business and Economic Research at the University of Tennessee. "But we are not expecting a recession any time soon and, while growth may slow, we still expect Tennessee's economy and employment to continue to grow at least into 2019 and 2020."

Trucking ahead

The growing trucking and logistics industry in Chattanooga attracted more than $300 million of new capital from a public stock offering, new equity investments and the addition of more freight brokers in Chattanooga during the past year.

U.S. Xpress Enterprises, one of America's biggest long-haul trucking companies, returned to public ownership in June with a $250 million stock issue. The 32-year-old trucking firm, now under the leadership of Eric Fuller — the son of one of the original founders — returned to stock ownership this year a decade after the company was taken private. Since going public in June, however, U.S. Xpress's stock has fallen to only about a third of its original price.

U.S. Xpress CEO Eric Fuller is shown at the company's headquarters in Chattanooga, Tenn., in this Aug. 23, 2017, staff file photo.

Two privately held logistics companies had major capital infusions in 2018 without going public.

In the biggest fundraising round of any Chattanooga startup, Bellhops in December raised $31.4 million to help the moving company expand into new markets and double their number of employees in 2019. The extra capital raised in its Series C round of funding brings the total amount of money raised to over $50 million since Bellhop's start in 2011.

Erlanger Health System raised nearly $30 million in gifts to fund most of the new $40 million Kennedy Children's Hospital outpatient center and the hospital is preparing plans for an even bigger expansion of the Children's Hospital inpatient facility, along with a new Heart and Lung Institute and new facilities in Dunlap, Tennessee and Murphy, North Carolina.

Local businesses sold

The public sector also attracted outside investor interest in disposing of a major city-owned asset during 2018. After years of trying to sell the city-owned Chattanoogan hotel and convention complex downtown, the Chattanooga Downtown Redevelopment Corp., finally reached a deal in October to sell the 199-room hotel and conference center for $27 million.

The Chattanoogan is seen on Monday, Oct. 23, in Chattanooga, Tenn.

The Chattanoogan is seen on Monday, Oct. 23,...

Photo by
C.B. Schmelter

A Buford, Georgia-based hotel chain, Ascent Hospitality, purchased the city-owned Chattanoogan hotel and promised to make "substantial investments" in the 17-year-old facility. Although the sales price is less than the hotel's share of a larger outstanding city bond issue, city officials said placing the hotel under private ownership will generate an extra $280,000 in property taxes a year and save the city $23 million in payments over the remaining life of the bonds used to pay for the hotel.

Other local businesses also were sold during 2018, including Coker Tires, which a management group bought from the founding family of Harold Coker, and Xpress Global Express, which was bought by a New York equity investment group three years after U.S. Xpress Enterprises spun off the carpet-focused trucking line.

Chattanooga's banking scene also had a major merger during 2018 when FirstBank, which acquired the former Northwest Georgia Bank three years ago, bought 14 bank branches in East Tennessee and Northwest Georgia from Atlantic Capital Bank. The Atlanta-based Atlantic Capital, which had expanded into Tennessee in 2015 with its purchase of the former FSG Bank, decided to focus on its commercial banking business in the Atlanta area and sell its Tennessee operations.

Real estate sales

In addition to the sale of the Chattanoogan, the biggest real estate sales in Hamilton County during 2018 were of apartment complexes, an Ooltewah shopping center and the abandoned riverfront factory.

The Elements of Chattanooga, a 340-unit apartment complex on Standifer Gap Road, was sold for the second time in two years, while the Ridgemont Apartments in Red Bank were sold to a Minnesota group that plans to upgrade the 266-unit complex.